The IAB released its report for the Internet advertising expenditures for the first half of 2011 which totaled nearly $15B. According the report released today by the IAB in conjunction with PwC, “The rate of growth more than doubled year-over-year, as last year’s first-half ad revenues of $12.1 billion had represented an 11.3 percent increase over 2009.”

Internet Advertising H1 Spend over the last 15 years

As you can see from the figure below, Internet advertising spend has continued to climb steadily in the first half of each of the last 15 years as measured and tracked by the IAB.

Internet advertising spend by H1 year as reported by IAB PwC 1996-2011

One of the Interesting things to note from the is the rapid acceleration of growth of Internet advertising from the H1 2010 to H1 2011 based on this latest IAB report. This can be seen in the figure below showing H1 growth rates of year over year growth rates for Internet advertising.

Growth Rate of H1 2011 More than Double Growth Rate of H1 2010

First half Internet advertising growth rate by year as reported by IAB, PwC for 1996-2011

We can see from the above growth rates that the first half of 2011 grew at a rate of 23% as opposed to 11% growth rate for the first half of 2010 relative to the first half of 2009. This is a good sign for the health of the Internet advertising industry in what most see as very difficult economic times.

As we can see from the distributions of Internet advertising spend in H1 2010 to H1 2011, the winners were search (35% –> 36%) and sponsorships (1% –> 2%) at the expense of classifieds (7% –> 6%) and rich media (4% –> 3%). The interesting thing is that since sponsorships are such a small piece of the Internet advertising pie, a 1% change doubled their share and with sponsorships losing 1%, representing a decline of 25% as compared to their 4% share in H1 2010.

The trend for Internet advertising to be bought and sold on performance models versus purely CPM (cost per 1000 impressions) continues, shifting the performance risk away from the advertiser and onto the publishers and ad networks.

Internet advertising percentage by purchase model 2010

Internet advertising percentage by purchase model 2011

We can see that from the first half of 2010 to the first half of 2011, a 3% increase in performance-based Internet advertising has occurred. Hybrid models combining performance and impression-based models grew 25% from 4% to 5% while CPM models declined from 35% to 31%, putting more pressure on publishers to sell their inventory on a performance basis, thus requiring publishers and ad networks to take on a bigger stake in an ad campaigns success.

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Rick Noel is an experienced digital marketer enabling businesses and organizations to grow through the Internet, while maximizing marketing ROI (Return On Investment). Rick is the CEO and Co-Founder of eBiz ROI, Inc., a full-service digital marketing agency located in Ballston Lake, NY.